KIRBY CORPORATION Statements contained in this Form 10-Q that are not historical facts, including, but not limited to, any projections contained herein, are forward-looking statements and involve a number of risks and uncertainties. Such statements involve risks and uncertainties. Such statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," or "continue," or the negative thereof or other variations thereon or comparable terminology. The actual results of the future events described in such forward-looking statements in this Form 10-Q could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: adverse economic conditions, industry competition and other competitive factors, adverse weather conditions such as high water, low water, tropical storms, hurricanes, tsunamis, fog and ice, tornados, COVID-19 or other pandemics, marine accidents, lock delays, fuel costs, interest rates, construction of new equipment by competitors, government and environmental laws and regulations, and the timing, magnitude and number of acquisitions made by the Company. For a more detailed discussion of factors that could cause actual results to differ from those presented in forward-looking statements, see Item 1A-Risk Factors found in the Company's Annual Report on Form 10K for the year endedDecember 31, 2021 . Forward-looking statements are based on currently available information and the Company assumes no obligation to update any such statements. For purposes of Management's Discussion, all net earnings (loss) per share attributable to Kirby common stockholders are "diluted earnings (loss) per share." Overview The Company is the nation's largest domestic tank barge operator, transporting bulk liquid products throughout the Mississippi River System, on theGulf Intracoastal Waterway , and coastwise along all threeUnited States coasts. The Company transports petrochemicals, black oil, refined petroleum products and agricultural chemicals by tank barge. Through KDS, the Company provides after-market service and parts for engines, transmissions, reduction gears and related equipment used in oilfield services, marine, power generation, on-highway, and other industrial applications. The Company also rents equipment including generators, industrial compressors, high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets, and manufactures and remanufactures oilfield service equipment, including pressure pumping units, manufactures cementing and pumping equipment as well as coil tubing and well intervention equipment, electric power generation equipment, specialized electrical distribution and control equipment, and high capacity energy storage/battery systems for oilfield service and railroad customers.
The following table summarizes key operating results of the Company (in thousands, except per share amounts):
Three Months Ended March 31,
2022 2021
Total revenues $ 610,782 $ 496,850
Net earnings (loss) attributable to Kirby $
17,434
$ 0.29 $ (0.06 )
Net cash provided by operating activities $ 32,222 $ 102,558
Capital expenditures $ 35,075 $ 14,052
Cash provided by operating activities for the 2022 first quarter decreased
primarily due to the receipt of a tax refund of $119.5 million , including
accrued interest, for the Company's 2019 federal tax return during the 2021
first quarter. For the 2022 first quarter, capital expenditures of $35.1 million
included $30.1 million in KMT and $5.0 million in KDS and corporate, more fully
described under cash flow and capital expenditures below.
The Company projects that capital expenditures for 2022 will be in the $170
million to $190 million range. The 2022 construction program will consist of
approximately $5 million for the construction of new inland towboats, $145
million to $155 million primarily for maintenance capital and improvements to
existing marine equipment and facilities, and $20 million to $30 million for new
machinery and equipment, facilities improvements, and information technology
projects in KDS and corporate.
The Company's debt-to-capitalization ratio decreased to 28.4% at March 31, 2022
from 28.7% at December 31, 2021 , primarily due to repayments under the Term Loan
in the 2022 first quarter, and an increase in total equity, primarily due to the
net earnings attributable to Kirby of $17.4 million . The Company's debt
outstanding as of March 31, 2022 and December 31, 2021 is detailed in Long-Term
Financing below.
14
--------------------------------------------------------------------------------Marine Transportation
For the 2022 first quarter, KMT generated 58% of the Company's revenues. The segment's customers include many of the major petrochemical and refining companies that operate inthe United States . Products transported include intermediate materials used to produce many of the end products used widely by businesses and consumers - plastics, fiber, paints, detergents, oil additives and paper, among others, as well as residual fuel oil, ship bunkers, asphalt, gasoline, diesel fuel, heating oil, crude oil, natural gas condensate, and agricultural chemicals. Consequently, KMT is directly affected by the volumes produced by the Company's petroleum, petrochemical and refining customer base.
The following table summarizes the Company's marine transportation fleet:
March 31,
2022 2021
Inland tank barges:
Owned 983 1,008
Leased 42 49
Total 1,025 1,057
Barrel capacity (in millions) 22.9 23.7
Active inland towboats (quarter average): Owned 207 216 Chartered 56 25 Total 263 241 Coastal tank barges: Owned 29 43 Leased 1 1 Total 30 44 Barrel capacity (in millions) 3.1 4.2 Coastal tugboats: Owned 26 39 Chartered 3 3 Total 29 42 Offshore dry-bulk cargo barges (owned) 4
4
Offshore tugboats and docking tugboat (owned and chartered) 5
5
The Company also owns shifting operations and fleeting facilities for dry cargo barges and tank barges on the Houston Ship Channel and inFreeport andPort Arthur, Texas , andLake Charles, Louisiana , and a shipyard for building towboats and performing routine maintenance near the Houston Ship Channel, as well as a two-thirds interest inOsprey Line, L.L.C. , which transports project cargoes and cargo containers by barge.
During the 2022 first quarter, the Company's inland tank barge count and capacity was unchanged.
KMT revenues for the 2022 first quarter increased 18% and operating income increased 773% compared to the 2021 first quarter. The increases for the 2022 first quarter were primarily due to increased tank barge utilization and term and spot pricing in the inland market and increased fuel rebills in the inland and coastal markets. The 2021 first quarter was also heavily impacted by Winter Storm Uri which shut down manyGulf Coast refineries and chemical plants for an extended period of time starting in mid-February. These emergency shutdowns resulted in significantly reduced liquids production and lower volumes for the Company's inland marine transportation market during the 2021 first quarter. The 2022 and 2021 first quarters were also impacted by poor operating conditions including seasonal wind and fog along theGulf Coast , flooding on theMississippi River , and various lock closures along theGulf Intracoastal Waterway , in addition to ice on theIllinois River . For the 2022 and 2021 first quarters the inland tank barge fleet contributed 78% and 75%, respectively, and the coastal fleet contributed 22% and 25%, respectively, of KMT revenues. Inland tank barge utilization levels averaged in the mid-80% range during the 2022 first quarter compared to the mid-70% range during the 2021 first quarter. The 2022 first quarter reflected increasing activity levels as a result of higher refinery and petrochemical plant utilization while the 2021 first quarter was impacted by reduced demand resulting from the effects of the COVID-19 pandemic causing an economic slowdown as well as reduced volumes due to Winter Storm Uri. 15 -------------------------------------------------------------------------------- Coastal tank barge utilization levels averaged in the low 90% range during the 2022 first quarter compared to the mid-70% range during the 2021 first quarter. The increase in coastal tank barge utilization during 2022 was primarily due to the retirement of underutilized barges in the 2021 third quarter and some modest improvements in customer demand. Barge utilization in the coastal marine fleet continued to be impacted by the oversupply of tank barges in the coastal industry in 2022 and 2021. During both the 2022 and 2021 first quarters approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. Inland time charters during the 2022 and 2021 first quarters represented 58% and 61%, respectively, of the inland revenues under term contracts. During both the 2022 and 2021 first quarters approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues. Coastal time charters represented approximately 90% and 85% of coastal revenues under term contracts during the 2022 and 2021 first quarters, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.
The following table summarizes the average range of pricing changes in term and spot contracts renewed during 2022 compared to contracts renewed during the corresponding quarter of 2021:
Three Months Ended
March 31, 2022
Inland market:
Term increase 7% - 9%
Spot increase 15% - 20%
Coastal market (a):
Term increase 4% - 6%
Spot increase 4% - 6%
(a)
Spot and term contract pricing in the coastal market are contingent on various
factors including geographic location, vessel capacity, vessel type, and product
serviced.
Effective January 1, 2022 , annual escalators for labor and the producer price
index on a number of inland multi-year contracts resulted in rate increases on
those contracts of approximately 5%, excluding fuel.
KMT operating margin was 4.8% and 0.6% for the 2022 and 2021 first quarters, respectively.
Distribution and Services KDS sells genuine replacement parts, provides service mechanics to overhaul and repair engines, transmissions, reduction gears and related oilfield services equipment, rebuilds component parts or entire diesel engines, transmissions and reduction gears, and related equipment used in oilfield services, marine, power generation, on-highway and other industrial applications. The Company also rents equipment including generators, industrial compressors, high capacity lift trucks, and refrigeration trailers for use in a variety of industrial markets, manufactures and remanufactures oilfield service equipment, including pressure pumping units, and manufactures cementing and pumping equipment as well as coil tubing and well intervention equipment, electric power generation equipment, specialized electric distribution and control equipment, and high capacity energy storage/battery systems for oilfield service and railroad customers. For the 2022 first quarter KDS generated 42% of the Company's revenues, of which 88% was generated from service and parts and 12%, from manufacturing. The results of KDS are largely influenced by the economic cycles of the oil and gas, marine, power generation, on-highway, and other related industrial markets.
KDS revenues for the 2022 first quarter increased 30% and operating income
increased 277% compared with the 2021 first quarter. In the commercial and
industrial market, the increases for the 2022 first quarter were primarily
attributable to improved economic activity across
In the oil and gas market, revenues and operating income improved compared to the 2021 first quarter due to higher oilfield activity which resulted in increased demand for new transmissions and parts in the distribution business. Although the manufacturing business was heavily impacted by supply chain delays, the business continued to experience increased orders and deliveries of new environmentally friendly pressure pumping equipment and power generation equipment for electric fracturing. For the 2022 first quarter, the oil and gas market contributed 42% of KDS revenues.
KDS operating margin was 4.3% and 1.5% for the 2022 and 2021 first quarters, respectively.
16
--------------------------------------------------------------------------------Outlook
Although the 2022 first quarter was heavily impacted by the COVID-19 Omicron variant in KMT, activity levels improved considerably in March. KDS also experienced supply chain challenges that impacted the 2022 first quarter but expects overall demand for its products and services to continue to improve as the year progresses. As such, the Company expects both KMT and KDS to deliver continued improved financial results in 2022. The inland marine transportation market, revenues and operating income are expected to continue to improve, driven by increased barge utilization, improvements in the spot market, and renewals of expiring term contracts at higher rates. Rising costs from inflation, including significantly higher fuel prices, are expected to be headwinds but are anticipated to be largely mitigated when escalations in contracts occur during the second half of the year. In coastal marine, modest improvements in demand and pricing are anticipated in 2022, but revenues and operating income are expected to be impacted by planned shipyard maintenance and ballast water treatment installations on certain vessels for the duration of the year. KDS results are largely influenced by the cycles of the oil and gas, marine, power generation, on-highway and other related industrial markets. In the oil and gas market, high commodity prices, increasing rig counts, and growing well completions activity are expected to result in increased demand for original equipment manufacturer products, parts, and services as well as for new environmentally friendly pressure pumping equipment and power generation equipment for electric fracturing. In commercial and industrial, favorable economic activity is expected to result in increased demand in power generation, marine repair, and on-highway. Overall, despite ongoing supply chain issues and long lead times, favorable oilfield fundamentals and increased demand in commercial and industrial are expected to result in improved financial results in 2022. Acquisition
On
Results of Operations
The following table sets forth the Company's KMT and KDS revenues and the
percentage of each to total revenues for the comparable periods (dollars in
thousands):
Three Months Ended March 31,
2022 % 2021 %
Marine transportation $ 355,536 58 % $ 300,951 61 %
Distribution and services 255,246 42 195,899 39
$ 610,782 100 % $ 496,850 100 %
Marine Transportation
The following table sets forth KMT revenues, costs and expenses, operating income, and operating margin (dollars in thousands):
Three Months Ended March 31,
2022 2021 % Change
Marine transportation revenues
18 %
Costs and expenses: Costs of sales and operating expenses 254,359 214,125
19
Selling, general and administrative 32,336 30,578 6
Taxes, other than on income 7,820 6,729 16
Depreciation and amortization 44,086 47,579 (7 )
338,601 299,011 13
Operating income $ 16,935 $ 1,940 773 %
Operating margins 4.8 % 0.6 %
17--------------------------------------------------------------------------------
Marine Transportation Revenues
The following table shows the marine transportation markets serviced by the Company, KMT revenue distribution, products moved and the drivers of the demand for the products the Company transports:
2022 First
Quarter
Markets Revenue
Serviced Distribution Products Moved Drivers
Petrochemicals 50% Benzene, Styrene, Methanol, Consumer
Acrylonitrile, Xylene, non-durables - 70%,
Naphtha, Caustic Soda, Consumer durables -
Butadiene, Propylene 30%
Black Oil 26% Residual Fuel Oil, Coker Fuel for Power
Feedstock, Vacuum Gas Oil, Plants and Ships,
Asphalt, Carbon Black Feedstock for
Feedstock, Crude Oil, Natural Refineries, Road
Gas Condensate, Ship Bunkers Construction
Refined 20% Gasoline, No. 2 Oil, Jet Fuel, Vehicle Usage, Air
Petroleum Heating Oil, Diesel Fuel, Travel, Weather
Products Ethanol Conditions,
Refinery
Utilization
Agricultural 4% Anhydrous Ammonia, Nitrogen - Corn, Cotton and
Chemicals Based Liquid Fertilizer, Wheat Production,
Industrial Ammonia Chemical Feedstock
Usage
KMT revenues for the 2022 first quarter increased 18% compared to the 2021 first
quarter revenues. The increase for the 2022 first quarter was primarily due to
increased tank barge utilization and term and spot pricing in the inland market
and increased fuel rebills in the inland and coastal markets. The 2021 first
quarter was also heavily impacted by Winter Storm Uri which shut down many Gulf
Coast refineries and chemical plants for an extended period of time starting in
mid-February. These emergency shutdowns resulted in significantly reduced
liquids production and lower volumes for the Company's inland marine
transportation market during the 2021 first quarter. The 2022 and 2021 first
quarters were also impacted by poor operating conditions including seasonal wind
and fog along the Gulf Coast , flooding on the Mississippi River , and various
lock closures along the Gulf Intracoastal Waterway , in addition to ice on the
Illinois River . For the 2022 and 2021 first quarters the inland tank barge fleet
contributed 78% and 75%, respectively, and the coastal fleet contributed 22% and
25%, respectively, of KMT revenues.
Inland tank barge utilization levels averaged in the mid-80% range during the
2022 first quarter compared to the mid-70% range during the 2021 first quarter.
The 2022 first quarter reflected increasing activity levels as a result of
higher refinery and petrochemical plant utilization while the 2021 first quarter
was impacted by reduced demand resulting from the effects of the COVID-19
pandemic causing an economic slowdown as well as reduced volumes due to Winter
Storm Uri.
Coastal tank barge utilization levels averaged in the low 90% range during the
2022 first quarter compared to the mid-70% range during the 2021 first quarter.
The increase in coastal tank barge utilization during 2022 was primarily due to
the retirement of underutilized barges in the 2021 third quarter and some modest
improvements in customer demand. Barge utilization in the coastal marine fleet
continued to be impacted by the oversupply of tank barges in the coastal
industry in 2022 and 2021.
The petrochemical market, the Company's largest market, contributed 50% of KMT
revenues for the 2022 first quarter, reflecting increased volumes and
utilization from
The black oil market, which contributed 26% of KMT revenues for the 2022 first quarter, reflected improved demand as refinery utilization and production levels of refined petroleum products and fuel oils increased following the height of the COVID-19 pandemic. During the 2022 first quarter, the Company transported crude oil and natural gas condensate produced from thePermian Basin and the Eagle Ford shale formation inTexas , both along theGulf Intracoastal Waterway with inland vessels and in theGulf of Mexico with coastal equipment. Additionally, the Company transported volumes of Utica natural gas condensate downriver from the Mid-Atlantic to theGulf Coast and Canadian and Bakken crude downriver from the Midwest to theGulf Coast . The refined petroleum products market, which contributed 20% of KMT revenues for the 2022 first quarter, reflected increased volumes in the inland market as refinery utilization and product levels improved following the height of the COVID-19 pandemic. The agricultural chemical market, which contributed 4% of KMT revenues for the 2022 first quarter, reflected improved demand for transportation of both domestically produced and imported products, primarily due to improved economic conditions following the height of the COVID-19 pandemic. 18 -------------------------------------------------------------------------------- For the 2022 first quarter, the inland operations incurred 3,137 delay days, 10% more than the 2,854 delay days that occurred during the 2021 first quarter. Delay days measure the lost time incurred by a tow (towboat and one or more tank barges) during transit when the tow is stopped due to weather, lock conditions, or other navigational factors. Delay days reflected poor operating conditions due to heavy wind and fog along theGulf Coast and high water conditions on the Mississippi River System during the 2022 and 2021 first quarters. The 2022 first quarter was also impacted by ice on theIllinois River while the 2021 first quarter was impacted by closures of key waterways as a result of lock maintenance projects. The increase in delay days in the 2022 first quarter reflects increased volumes and barge utilization compared to the 2021 first quarter. During both the 2022 and 2021 first quarters approximately 65% of KMT inland revenues were under term contracts and 35% were spot contract revenues. Inland time charters during the 2022 and 2021 first quarters represented 58% and 61%, respectively, of the inland revenues under term contracts. During both the 2022 and 2021 first quarters approximately 80% of the coastal revenues were under term contracts and 20% were spot contract revenues. Coastal time charters represented approximately 90% and 85% of coastal revenues under term contracts during the 2022 and 2021 first quarters, respectively. Term contracts have contract terms of 12 months or longer, while spot contracts have contract terms of less than 12 months.
The following table summarizes the average range of pricing changes in term and spot contracts renewed during 2022 compared to contracts renewed during the corresponding quarter of 2021:
Three Months Ended
March 31, 2022
Inland market:
Term increase 7% - 9%
Spot increase 15% - 20%
Coastal market (a):
Term increase 4% - 6%
Spot increase 4% - 6%
(a)
Spot and term contract pricing in the coastal market are contingent on various
factors including geographic location, vessel capacity, vessel type, and product
serviced.
Effective January 1, 2022 , annual escalators for labor and the producer price
index on a number of inland multi-year contracts resulted in rate increases on
those contracts of approximately 5%, excluding fuel.
Marine Transportation Costs and Expenses
Costs and expenses for the 2022 first quarter increased 13% compared to the 2021 first quarter. Costs of sales and operating expenses for the 2022 first quarter increased 19% compared with the 2021 first quarter. The increases during the 2022 first quarter primarily reflect improved business activity levels and increased fuel costs as well as incremental costs associated with the COVID-19 Omicron variant. The inland marine transportation fleet operated an average of 263 towboats during the 2022 first quarter, of which an average of 56 were chartered, compared to 241 during the 2021 first quarter, of which an average of 25 were chartered. The increase was primarily due to increasing business activity levels during the 2022 first quarter. The 2021 first quarter activity was also impacted by Winter Storm Uri. Generally, variability in demand or anticipated demand, as tank barges are added or removed from the fleet, as chartered towboat availability changes, or as weather or water conditions dictate, the Company charters in or releases chartered towboats in an effort to balance horsepower needs with current requirements. The Company has historically used chartered towboats for approximately one-fourth of its horsepower requirements. During the 2022 first quarter, the inland operations consumed 11.5 million gallons of diesel fuel compared to 10.8 million gallons consumed during the 2021 first quarter. The average price per gallon of diesel fuel consumed during the 2022 first quarter was$2.50 per gallon compared with$1.65 per gallon for the 2021 first quarter. Fuel escalation and de-escalation clauses are typically included in term contracts and are designed to rebate fuel costs when prices decline and recover additional fuel costs when fuel prices rise; however, there is generally a 30 to 90 day delay before contracts are adjusted. Spot contracts do not have escalators for fuel. Selling, general and administrative expenses for the 2022 first quarter increased 6% compared to the 2021 first quarter, primarily due to higher business activity levels. Business activity levels in the 2021 first quarter were impacted by COVID-19 and the resulting economic slowdown as well as Winter Storm Uri.
Taxes, other than on income, for the 2022 first quarter increased 16% compared with the 2021 first quarter, primarily reflecting higher property taxes on marine transportation equipment.
19
--------------------------------------------------------------------------------Depreciation and amortization for the 2022 first quarter decreased 7% compared to the 2021 first quarter, primarily reflecting retirements, sales, and impairment of marine equipment during 2021.
Marine Transportation Operating Income and Operating Margin
KMT operating income for the 2022 first quarter increased 773%, respectively, compared with the 2021 first quarter. The 2022 first quarter operating margin was 4.8% compared with 0.6% for the 2021 first quarter. The increases in operating income and operating margin were primarily due to increased barge utilization and term and spot contract pricing in the inland market, each as a result of improving business activity levels, partially offset by the impacts of the COVID-19 Omicron variant and increasing fuel prices. The 2021 first quarter was also impacted by Winter Storm Uri.
Distribution and Services
The following table sets forth KDS revenues, costs and expenses, operating income (loss), and operating margin (dollars in thousands):
Three Months Ended March 31,
2022 2021 % Change
Distribution and services revenues
30 %
Costs and expenses: Costs of sales and operating expenses 196,519 149,127
32
Selling, general and administrative 41,922 36,488 15
Taxes, other than on income 1,728 1,492 16
Depreciation and amortization 4,106 5,881 (30 )
244,275 192,988 27
Operating income $ 10,971 $ 2,911 277 %
Operating margins 4.3 % 1.5 %
Distribution and Services Revenues
The following table shows the markets serviced by KDS, the revenue distribution, and the customers for each market:
2022 First Quarter
Revenue
Markets Serviced Distribution Customers
Commercial and Industrial 58% Inland River Carriers - Dry and
Liquid, Offshore Towing - Dry and
Liquid, Offshore Oilfield Services -
Drilling Rigs & Supply Boats, Harbor
Towing, Dredging, Great Lakes Ore
Carriers, Pleasure Crafts, On and
Off-Highway Transportation, Power
Generation, Standby Power Generation,
Pumping Stations, Mining
Oil and Gas 42% Oilfield Services, Oil and Gas
Operators and Producers
KDS revenues for the 2022 first quarter increased 30% compared to the 2021 first
quarter. In the commercial and industrial market, the increase for the 2022
first quarter was primarily attributable to improved economic activity across
the United States which resulted in higher business levels in the marine and
on-highway businesses. Increased product sales in Thermo King also contributed
favorably to the 2022 first quarter results. In addition, the 2021 first quarter
was impacted by Winter Storm Uri which caused reduced activity, especially in
the Southern United States , in the commercial and industrial market. For the
2022 first quarter, the commercial and industrial market contributed 58% of KDS
revenues.
In the oil and gas market, revenues improved compared to the 2021 first quarter
due to higher oilfield activity which resulted in increased demand for new
transmissions and parts in the distribution business. Although the manufacturing
business was heavily impacted by supply chain delays, the business continued to
experience increased orders and deliveries of new environmentally friendly
pressure pumping equipment and power generation equipment for electric
fracturing. For the 2022 first quarter, the oil and gas market contributed 42%
of KDS revenues.
20
--------------------------------------------------------------------------------Distribution and Services Costs and Expenses
Costs and expenses for the 2022 first quarter increased 27% compared with the 2021 first quarter. Costs of sales and operating expenses for the 2022 first quarter increased 32%, compared with the 2021 first quarter, reflecting higher demand in the marine and on-highway businesses in commercial and industrial markets as well as increased demand in the oil and gas market as a result of higher oilfield activity levels. Selling, general and administrative expenses for the 2022 first quarter increased 15%, compared to the 2021 first quarter, primarily due to higher salaries and higher warranty accruals associated with increased activity levels as well as salaries and costs related to the acquisition of assets of an energy storage systems manufacturer in the 2021 fourth quarter. Depreciation and amortization for the 2022 first quarter decreased 30%, compared to the 2021 first quarter, primarily due to sales of property and equipment and reduced capital spending during 2021.
Distribution and Services Operating Income and Operating Margin
KDS operating income for the 2022 first quarter increased 277% compared with the 2021 first quarter. The 2022 first quarter operating margin was 4.3% compared to 1.5% for the 2021 first quarter. The results reflect increased business levels in both the commercial and industrial and oil and gas markets.
Gain on Disposition of Assets
The Company reported a net gain on disposition of assets of$4.8 million for the 2022 first quarter and$2.1 million for the 2021 first quarter. The net gains were primarily from sales of marine transportation equipment.
Other Income and Expenses
The following table sets forth other income, noncontrolling interests, and interest expense (dollars in thousands):
Three Months Ended March 31,
2022 2021 % Change
Other income $ 4,308 $ 3,791 14 %
Noncontrolling interests
$ (10,203 ) $ (10,966 ) (7 )% Other Income Other income for the 2022 and 2021 first quarters include income of$3.4 million and$2.0 million , respectively, for all components of net benefit costs except the service cost component related to the Company's defined benefit plans. Other income for the 2021 first quarter also includes interest income from the Company's 2019 federal income tax refund received inFebruary 2021 .
Interest Expense
The following table sets forth average debt and average interest rate (dollars
in thousands):
Three Months Ended March 31,
2022 2021
Average debt $ 1,178,916 $ 1,417,127
Average interest rate 3.5 % 3.1 %
Interest expense for the 2022 first quarter decreased 7%, compared with the 2021
first quarter, primarily due to lower average debt outstanding as a result of
debt repayments during 2021. There was no capitalized interest excluded from
interest expense during the 2022 or 2021 first quarters.
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